Tuesday Jun 06, 2023
Pakistan wants to secure $2 billion in foreign funding.
Authorities say they have secured $4 billion of the $6 billion claim.
Pakistan is committed to completing the IMF program.
In its latest effort to revive a stalled International Monetary Fund (IMF) loan, Pakistan is seeking to secure $2 billion in external financing to bridge a $6 billion gap to revive the bailout program.
The Treasury Department said in an emailed response to Bloomberg that the government has lined up $4 billion in external financing and hopes to reach an agreement with the Washington-based lender before releasing the budget this Friday.
The government remains on the hook and the urgency to renew the $6.7 billion program - signed in 2019 and set to expire in June this year - is growing, with external funding and exchange rate policy among the biggest hurdles.
Disagreements between local authorities and the lender have stalled the ninth inspection for more than six months, one of the longest inspection delays.
"Pakistan remains committed to completing the IMF program and has already demonstrated its seriousness," the ministry said.
The ministry further added that it remains committed to mobilizing additional liquidity despite a significant decline in the current account deficit, which has reduced the requirement.
Saudi Arabia and the United Arab Emirates have pledged $3 billion in new financing to Pakistan. China and its state-owned banks have increased loan commitments of over $4 billion.
The IMF's resident representative for Pakistan, Esther Perez Ruiz, said in an email to Bloomberg that the program will be restarted once the authorities meet the lender's program targets, submit adequate funding in the budget presentation and there is a "proper market functioning" of the Pakistani rupee.
"IMF staff continue to work with the Pakistani authorities to pave the way for the board to meet before the expiration of the current program," the official said.
According to Columbia Threadneedle Investments, the South Asian nation has to repay about $22 billion in foreign loans - five times its foreign exchange reserves - during the next fiscal year starting in July.
The coalition government has taken a number of measures - including raising taxes, raising energy prices and allowing the rupee to weaken against the dollar - to meet the IMF's demands.
Once the IMF loan comes in, it will allow Pakistan to unlock more funding from other multilaterals.
The funds will help the $350 billion economy weather the dollar crisis, ease supply shortages and pull the South Asian country out of default risks ahead of elections due later this year.
Along with the economic crisis, the nation is also facing political turmoil as the Pakistan Tehreek-e-Insaf (PTI) continues its intermittent activities since the party was ousted from power last April.
